Case 3 Ryan Air Vs Virgin Atlantic

Team Members
Bharanidharan B Ashwin Valsraj Govind Kumar Verma Anjum Goyal

Introduction
Ryan Air Ryanair is an Irish low-cost airline one of Europe's largest carriers Virgin Atlantic Virgin Atlantic is a British airline owned by Virgin Group & Singapore Airlines. It is the eighth largest UK airline based on passenger numbers

Polar Diagrams:

Ryan Air
1985 1997 Quality 3 2.5 2 2 1.5 1 Cost 2 1 1 0.5 0 1 2 Speed 2010

1 2 Flexibility 2 Dependability 3

Virgin Atlantic
1985 1997 3 Quality 3 2.5 2 2 1.5 3 Cost 2 1 0.5 0 2 3 Speed 2010

1 2 Flexibility 2 Dependability 3

Analysis / Findings Ryan Air

In 1985: Cost: Ryan Air started as a Low Cost Airline, hence its focus was on providing lowest cost (Cost Level 1) similar to Southwest Airlines Quality: Ryan Air had moderate quality (Level 2) compared to industry standards Speed: Ryan Air had Speed Level 1 Dependability: Ryan Air had moderate dependability level of 2 Flexibility: It was at Level 1 (low flexibility) Market Influences: In 1985, there was high demand for low cost no frills service airlines Internal Decisions: Ryan Air decided to provide no frills low cost airline services focusing on market segmentation based on geographic region Suitability of Adopted Operations Strategy: The adopted strategy of Ryan Air was to provide low cost airline service which was very much appropriate as per market needs.

Virgin Atlantic
In 1985: Cost: Virgin Atlantic started operations as both regular & commercial service provider, hence it had Cost Level 2 as shown in the above diagram Quality: Virgin Atlantic had high quality (Level 3) compared to industry standards Speed: Virgin Atlantic had Speed Level 3 Dependability: Virgin Atlantic had moderate dependability level of 2 Flexibility: It was at Level 2 (moderate flexibility) Market Influences: There was a market need or requirement for an airline from London to the Falkland Islands, this gave birth to Virgin Atlantic Airways. Internal Decisions: Virgin Atlantic started providing both regular & commercial airline services as per market needs Suitability of Adopted Operations Strategy: The adopted strategy was very appropriate because there was market need for airline services from London & adjacent regions. This market need was satisfied by the operations strategy adopted by Virgin Atlantic.

In 1997: Cost: In 1997, cost of Ryan Air increased from Cost Level 1 to Cost Level 2 as per industry standards Quality: Ryan Airs quality decreased from Quality Level 2 to Quality Level 1 Speed: Ryan Air still had Speed Level 1 Dependability: Ryan Airs dependability increased from Dependability Level 2 to Dependability Level 3 Flexibility: It was at Level 2 (moderate flexibility) Market Influences: In 1997, there was deregulation of the air industry in Europe, which gave Ryan Air a lot of opportunity. Internal Decisions: Ryan Air decided to invest more in developing its infrastructure & started operating in more and more European countries Suitability of Adopted Operations Strategy: Ryan Airs strategy to operate more flights was the right move in order to expand its market share.

In 1997: Cost: Virgin Atlantics cost increased from Cost Level 2 to Cost Level 3 Quality: Virgin Atlantic had moderate quality (Level 2) compared to industry standards Speed: Virgin Atlantic had Speed Level 2 Dependability: Virgin Atlantic had moderate dependability level of 2 Flexibility: It was at Level 1 Market Influences: More number of passengers started using European airlines which meant there was high demand for European airlines like Virgin Atlantic Internal Decisions: Virgin Atlantic started operating more routes & destinations to satisfy the increasing demand Suitability of Adopted Operations Strategy: The operations strategy adopted by Virgin Atlantic was very appropriate because it could satisfy the market demand and also increase its market share

In 2010: In 2010: Cost: In 2010, cost of Ryan Air decreased Cost: Virgin Atlantics cost was still at Cost from Cost Level 2 to Cost Level 1 Level 3 Quality: Ryan Airs quality increased from Quality: Virgin Atlantic had High quality Quality Level 1 to Quality Level 2 (Level 3) compared to industry standards Speed: Ryan Air had Speed Level 2 Speed: Virgin Atlantic had still Speed Level 2 Dependability: Ryan Airs dependability Dependability: Virgin Atlantic had high decreased from Dependability Level 3 to dependability level of 3 Dependability Level 2 Flexibility: It was at Level 2 Flexibility: It was still at Level 2 (moderate Market Influences: There were a lot of flexibility) mergers & acquisitions which included a tieMarket Influences: In 2010, online booking up with British Airways & American Airlines was introduced & more routes were added. Internal Decisions: More Mergers & Internal Decisions: Ryan Air decided to make Acquisitions meant restructuring the flight appropriate use of online booking (internet routes & schedules of Virgin Atlantic to technology) to operate more routes. optimize its operations Suitability of Adopted Operations Strategy: Suitability of Adopted Operations Strategy: The strategy adopted by Ryan Air was very The adopted strategy of Virgin Atlantic was appropriate since more customers were very appropriate in order to continue as one using internet to book tickets. This led to of the prominent airlines in the European increasing profits for Ryan Air. industry & have a significant market share

Operations Strategy Matrix for Ryan Air:

Quality

Ryanair has been able to gain capacity by getting in the latest Boeings 737 fleets

Ryanairs leads in low-fare scheduled passenger airlines by means of constant improvements and expansion of its low cost services

The total process from hiring and training of pilots, cabin crews, maintenance personnel to maintaining its carriers and aircrafts in accordance with highest industry standards

Speed

With the aircraft orders it has placed up to 2012, the airlines fleet will increase to approximately 200 aircrafts to cope with an estimated 95 million passengers

Frequent point to point service on a number of shorthaul routes

Ryanair remained more punctual, experienced less amount of lost bags and fewer flight cancellation that other airlines

Dependability

High rates of completed flights and time savings

Customers can manage their bookings online rather than having to depend on call centre or travel agents With Ryanairs service will be able fully cover the low cost market from London , other operating bases such as Dublin, Brussels, Hahn etc must also be looked at Despite having the advantage of lowest cost base than other competitors, experts believe that the company can further reduce cost by growing at a fast pace Development & Organization

Flexibility

Covering highest number of routes with lowest fare than any other airline in Europe A part of optimizing the distribution cost, Ryan air will constantly use the internet as prime ticket distribution channel Process Technology

Cost Capacity

The average age of fleet which means savings on maintenance costs

Supply Networks

Operations Strategy Matrix for Virgin Atlantic:

Quality

Speed

The code-share agreement with Continental allows for a higher frequency, high quality service, and efficient competition The speed of Virgin Atlantic has been good for its supply networks as per industry standards Virgin Atlantic is installing Internet capabilities and is implementing Galileos Inside Availability (R), a hightech inventory management system The company is also engaged in code share and strategic alliance with various airlines, thus permitting greater external communication

Dependability

Flexibility

Cost Capacity Supply Networks

Offers inflight entertainment, and invests lots to ensure that the flights are more technologically advanced and passenger friendly. Costs of process technology is moderate compared to other airlines in the industry Process Technology

Virgin Atlantic operates multiple locations/ destinations around London with good flexibility. Its Organization is also appropriate for being flexible.

Development & Organization

Further Analysis:
Operations performance: Ryan Air: Effective and efficient business model with volumes of low ticket prices wil no frills onboard

Virgin Atlantic: Offers the best business product in the air, grow our leisure business even further, and run an efficient but effective global airline

Capacity Strategy: Ryan Air: High Aircraft utilization Frequent reliable departures Virgin Atlantic: Ordered a fresh batch of 380s. Expansion of its long haul routes other than Europe.

Substitutes for strategy: Ryan Air: Applying TQM to achieve the strategic objectives better and more effectively. So does Lean Six Sigma Virgin Atlantic: Looks to have niche markets, so al alternative strategy could be coming up with services which would satisfy every level of customers.

Purchasing and Supply Strategy: Ryan Air: Ryanair has a very healthy relationship with the main aeroplane supplier, Boeing. One is the supplier of planes and another is the supplier of fuels With the online system in place available, customers now prefer web bookings compared to going and making bookings from travel agents. Virgin Atlantic: In Virgin Atlantic case, the main aircraft manufacturers are Boeing and Airbus. Fuel companies are also one of the key suppliers for airlines, since fuel is the basic necessity for aircraft in order to operate. The airport itself supplies the services needed by aircrafts. IT companies such as IBM and NCR can be classified as suppliers as they supply IT solutions.

Process Technology strategy: Ryan Air: Wireless Technology expansion Introduction of satellite television Virgin Atlantic Virgin stresses the fact that the passengers should never feel bored during the flight, and hence invested a lot in his entertainment systems for each passenger as well as sony walkmans.

Process of operation Strategy - Formulation and Implementation: Ryan Air: Low Cost Competitive advantage, Low Cost Strategy Innovative methods of cost reduction Virgin Atlantic: Setting new standards for the rest of the industry to follow

Improvement Strategy Ryan Air: Management of low margins, cost efficiently and process optimization Reinforcing customer focus and CRM and yield management Virgin Atlantic: Further improving customer services for our business and leisure travellers

Product and Service Development and organization: Ryan Air: No frills Low fares Ancillary revenues (Focus differentiation) No fares (free complementary for customer loyalty) Virgin Atlantic: Had the first entertainment system for each individual passenger, the first airline to offer the complementary limousine pick. up, and the first airline who offer the first in-flight beauty treatment and business economy cabin. Everything to ensure that the passengers enjoy the whole flying experience for a lower cost.